November 19, 2009 - PACT (Prevent All Cigarette Trafficking (PACT) Act.. The illegal sale of tobacco products through the Internet leads to tax evasion and tobacco use by young people, members of Congress and merchants said Tuesday, November 17th. The Coalition to Stop Contraband Tobacco urged the Senate to pass a bill that would address the issue. The bill is scheduled for a vote Thursday, November 19th by the Senate Judiciary Committee.

PASS THIS LAW.. - In the U.S. Senator Herb Kohl is sponsoring a bill which would clamp down on illegal tobacco sales. H.R. 1676, the Prevent All Cigarette Trafficking Act (the PACT Act) of 2009, was passed 397-11 by the House of Representatives on Thursday, 5/21/2009. This legislation is extremely important, it will effectively end Internet and telephone tobacco smuggling by stopping shipments of cigarettes and smokeless tobacco through the U.S. Postal Service. FedEx, UPS, and DHL have already agreed not to mail tobacco. (Let's Get It Passed - Prevent All Tobacco Trafficking Act of 2009..)

"Each day we delay its passage, terrorists and criminals raise more money, states lose significant amounts of tax revenue, and kids have easy access to tobacco products sold over the Internet," said Sen. Herb Kohl, D-Wis., who sponsored the Prevent All Cigarette Trafficking (PACT) Act.The PACT Act, which would amend the 1949 Jenkins Act, increases penalties for violations, requires shipping records to ensure that taxes are paid and requires sellers to obtain age and identification verification from buyers. The Jenkins Act required sellers who ship tobacco products to report sales to state or local tobacco tax administrators.

All of the speakers said that tobacco products sold at online discount stores do not include state taxes, which eliminates competition with legal products that include the sometimes hefty taxes. According to the Justice Department, $5 billion of tax revenue is lost at the local, state and federal level every year.

Kohl said international criminal and terrorist organizations profit from the smuggling and sale of counterfeit cigarettes. The money is raised in the U.S. and funneled back to the groups, he said.

Jon Burkland, incoming chairman of the American Wholesale Marketers Association, said that the illegal sale of tobacco products hurts those who sell them legally. "From the distributor perspective, every illegal sale made on the Internet translates into a loss of a legal sale made by a law-abiding retailer or distributor," Burkland said. "It levels the playing field for hard-working, family-owned businesses by ensuring that everyone pays the proper taxes."

In New York, where the cigarette tax is $2.75 a pack, hundreds of thousands of smokers regularly buy cigarettes on the black market or online, said James Calvin, president of the New York Association of Convenience Stores. He said people turn to illegal means of buying cigarettes because of the steady increase of the state's cigarette tax. "So pervasive is this problem, that today, more than half of the cigarettes consumed by New Yorkers are purchased without the payment of any state or local tax whatsoever," Calvin said. "It cripples tax-collecting stores by depriving us of legitimate sales."

The wholesalers group conducted a study in 2005 to see if people could purchase cigarettes online and pay the state the taxes they owed. Despite a 2005 agreement among the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, state attorneys general and major credit card companies to ban all transactions with Internet cigarette vendors, the association found it was easy to buy cigarettes without taxes and required little or no age verification. They said it was difficult to figure out how to pay the taxes. When the group conducted a follow-up study in 2009, it found that little had changed.

"My 16-year old daughter has a debit card, I'm lucky that she doesn't smoke, but she can go online and buy these kinds of things," said Ronald Hampton, executive director of the National Black Police Association. Hampton, who is retired from the Washington's Metropolitan Police Department, said he has seen an increase in young people smoking cigarettes. He said the PACT Act would make it easier for law enforcement to combat contraband tobacco.

Matthew Myers, president of the Campaign for Tobacco Free Kids, said illegal Internet sales of tobacco leads to an increase in the number of people who die from tobacco use. "It is a farce, It's a joke to think that the current requirements are capable of cutting off tobacco sales," he said.